PRACTICE PERFOMANCE OVERVIEW DATA
Please note that unless otherwise specified, the period these KPI’s refer to is the last (most recent) completed financial year. If financial information for that period is not yet available, you will need to revert to the most recent completed financial year prior to that.
Normalised Net Profit %
The net profit of practices is so often miscalculated and misrepresented that, at the risk of adding some complication to your work, we feel it important to get this spot on. For a true comparison of profitability, a number of adjustments need to be considered (beyond those listed on your spread sheet) and these come under the following categories;
- Principal/s Salary Adjustments
If the principal/s salary is more or less than the deemed market rate, an adjustment needs to be made. This salary should be appropriate for any clinical or administrative work the principal/s are performing for the business. The definition of a true market rate for a principal varies but we will deem it to be $150,000 PA. This applies to averaged 38 – 50 hours per week work in and / or on the business. If you work less or more than this range let us know and we will help you make an appropriate adjustment.
- Principal/s Superannuation Adjustments
If the principal/s contributes more or less than 9.5% of the deemed market rate salary for hours worked please add back or remove this from the profit.
- Rent Adjustments
If you own your practice building/s and are not paying a local market rental rate
for commercial premises fitted out and zoned for medical use,
please make an adjustment. If you are not sure on what the market rate per m2 should be, please contact a local real estate agent that handles commercial leases in your area for advice.
- Stock/COGS adjustments
If you receive a wholesaler’s discount, product rebates, or rebates on any other elements of COGS (e.g. external pathology/cremation/oxygen) with the
option to receive either a discount on the bill or the equivalent as personal
benefits and you choose the latter, please add the equivalent amount back to profit.
- Debtor Adjustments
If debtor amounts stay more or less the same year to year then no adjustment is necessary. If they have fluctuated significantly, an appropriate adjustment should be made i.e. for increased debtors reduce profit and decreased debtors increase profit.
- Business Loan Interest, Equipment Leases and Depreciation
An adjustment should be made for any interest you are paying on loans for the business if you have them, equipment/work vehicle leases and depreciation for eligible items i.e. these should be added to the profit.
- Low Value Equipment
If your accountant applies the faster, small business rate of depreciation to low value items, an adjustment should be made i.e. add this to the profit.
- Personal Expenses
Adjustments should be made for any personal expenses run through the business such as private vehicle use, groceries, utilities not related to the business, travel etc. If these are unrelated to the running of the business these all need to be added back to the profit. If you have engaged in personal development unrelated to the business that is listed as a staff training expense, this should be added back also.
- Government Cashflow Boost
Please remove the government cash flow boost.
Growth in Profit %
Self-explanatory. Please express as a percentage (not dollars), the increase or decrease of the total profit amount from current completed financial year compared to previous completed financial year. If profit has reduced year to year, please express the figure as a negative percentage. Result should be entered as a percentage not a decimal e.g. 10% not ‘0.1’
Example of Growth in Profit % – if normalised net profit for the previous year is 10% and normalised net profit is 20% in current year, this would represent a 100% Growth in Profit.
Annual Turnover $
Remember all turnover/revenue is considered excluding GST.
Number of full-time Equivalents
Refers to the number of full-time equivalent veterinarians in your practice for the period. The easiest way to calculate this is look at your payroll information, add up the number of hours worked by vets in your business, add in the clinical hours worked by the owner (that are not already detailed in payroll) as well as any locum support provided.
To get FTE number, divide this figure (total vet hours) by the hours for
the same period that one vet working 38 hours per week would have worked. Assuming 4 weeks annual leave a year, this equates to 1824hrs (48 x 38 = 1824 hours).
Growth in Turnover %
Please express as a percentage (not dollars), the increase or decrease in turnover from current completed financial year to previous completed financial year. If turnover has reduced year to year, please express the figure as a negative percentage. Result should not be entered as a decimal e.g. 10% not ‘0.1’
Example of Growth in Turnover % – if turnover for previous year is $1M and turnover for year 2 is $1.5M, this would represent a 50% Growth in Turnover.
Veterinary fees generated: veterinary salaries ratio
The 5:1 rule applies to this statistic.
1. Veterinary Fees
Please include veterinary specific services and veterinary medications provided in the course of veterinary work. Where possible exclude services and sales not directly attributable to the vet e.g. unrelated OTC sales, grooming etc. This should be expressed exclusive of GST.
2. Veterinary Salaries
Include wages, bonuses, fringe benefits (e.g. car) and super. Include ‘true market rate’ adjustments for clinical work done by owner/s not already included in payroll: for this benchmark we use pro-rata $100,000 per 38hr week plus super.
Active Clients Per FTE
Our definition of Active Clients is either new clients or existing clients that
visited the practice and spent money in the last 12 months for the period assessed. For this benchmark we divide the total number of Active Clients for the period by the FTE number. If unsure on how to generate this report with your software, it is worth working through the process with you BMS technical support. Failing that, let us know.
New Client %
The percentage of those Active Clients that are new clients.
New clients = someone that came to your practice for the first time during that period.
If unsure on how to generate this report with your software, it is worth working through the process with you BMS technical support. Failing that, let us know. Result should not be entered as a decimal e.g. 10% not ‘0.1’
Lapsed client number per FTE
Our definition of lapsed client will be someone that visited your practice in the 24 months prior to the end date of the period assessed but not in the last 12 months prior to the end date of the period assessed. Divide the total number of lapsed clients by the FTE number.
If unsure on how to generate this report with your software, it is worth working through the process with you BMS technical support. Failing that, let us know.
% Pets Insured
You can calculate this % in one of two ways;
1) Do a search on your BMS
2) Survey at least 100 clients attending your practice and calculate the percentage
If you are not convinced of the accuracy of either one, complete both the above and use the higher figure. Please do not enter N/A or ‘0’ in this field. The result should not be entered as a decimal e.g. 10% not ‘0.1’
Dentistry % of Gross Turnover
Dentistry is an excellent general business health indicator which is why we have included dental revenue as a percentage of turnover in your trimester 1 data. We will analyse dentistry data further in subsequent trimesters.
The question is often asked – how do you accurately identify total dental revenue?
As you know, dentistry can be performed as an adjunct to other procedures involving general anaesthesia and dental examinations form part of a general health examination within a consultation.
It is a commonly held view in benchmarking dentistry that we should try to isolate, if possible, the revenue directly attributed to it. Depending on your business management software reporting capabilities and your pricing/billing mechanism, this is easier said than done.
On this basis we have decided to ask you for at least one and ideally both of these options for your dental percentage of total revenue;
- Pure dental professional fees including only (Type 1): • Dental Surgery (extractions)
• Dental Nerve Blocks
• Dental Radiography
• Dental Examinations
• Dental Scale and Polish • Etc.
- Revenue directly related to dentistry in your business (Type 2):
If you have all-inclusive package pricing for dental procedures of different grades, please include all revenue from these.
- Also add in stand-alone add-on dental fees e.g. dental radiography, nerve blocks, extractions etc.
- If it is dentistry combined with another procedure, please separate the dental fees as best you can. Please indicate on the spreadsheet which type you are presenting (“Type 1” or “Type 2”).
COSTS AS A PERCENTAGE OF TURNOVER
The period these KPI’s refer to is the last (most recent) completed financial year. All the results should not be entered as a decimal e.g. 10 not ‘0.1’
Please note: for the purposes of accurate comparison we will be including any
adjustments applied to the normalised net profit calculation to the costs section also. Please ensure you have adjusted super for the principal.
Total Wages %
Please include the wages of your entire team, including any outside administrative support you may pay for, e.g. Bookkeepers. This figure needs to include Superannuation, bonuses and all out of hours payments.
In the case of the principal/s -please include market rate adjustment of $150,000 PA pro- rata 38-50 hour week working in and/or on the business to the Vet and Admin % parameters accordingly.
Wages – Vets %
Please include the wages of all veterinary team members. In the case of the principal/s performing a veterinary clinical role, please include pro-rata calculations. This figure needs to include Superannuation, bonuses and all out of hours payments.
Wages – Nurses, Receptionists and Kennel Hands %
Please include the wages of all non-administrative support staff in the team, including nurses, receptionists, kennel assistants, stable hands etc. This figure needs to include Superannuation, bonuses and all out of hours payments.
Wages – Admin %
Please include the wages of all administrative staff, including practice managers, office managers, bookkeepers etc. In the case of blended roles (e.g a nursing Practice Manager) please allocate the appropriate amount of wage accordingly. For example, a Practice Manager who nurses 1 day out of 5 per week, would have 80% of their wages allocated to admin and 20% to nursing. Same applies for Practice Principal working some clinical and some admin. This figure needs to include Superannuation, bonuses and all out of hours payments.
Cost of Goods Sold. Typically includes (but not limited to):
- Drugs & Supplies
- External lab
- Internal lab supplies and maintenance
• Pathological waste and sharps disposal • Body disposal & cremation • Radiography & surgical supplies
In instances where you are receiving a rebate from the industry provider and you are not using it to directly offset the COGS, please adjust this figure accordingly.
As per previous information on rent adjustments for market rate. Please include outgoings apart from building maintenance in this area too if appropriate for you e.g. building insurance and rates.
Interest & Leases %
Interest on leases and or business loans; goodwill, vehicles, equipment or overdraft facility.
As per normalised net profit information. It is likely you’ll need your accountant’s help on this one.
This is typically lower value items that you wouldn’t always consider leasing e.g. clippers, low value surgical instruments, floor vacuum, brooms, chairs, pulse oximeters etc.
Software Expenses %
The biggest one here would be your business management software but you could also include things like VIN, Office 365, Antivirus software, iRecall, Online booking software, Internet access expenses and benchmarking software. E.g. Profit Diagnostix.
Things like, newsletters, website (including hosting fee), Google Ad words, Facebook or Instagram Ads, other forms of external marketing that incur expenses.
Bank Charges %
Things like Vet-pay, Merchant facility fees, Credit card transaction fees etc.
Repairs & Maintenance %
Including building maintenance & repairs as well as non-laboratory equipment and vehicle/s. E.g. Washing machines, dryers, clippers, fridge, freezers, aircon systems, infusion pumps etc.
Mobile and fixed. Include equipment and line rental.
COGS are the second biggest expense for virtually all veterinary practices. With drugs and consumables forming the biggest component of COGS it is valuable to compare the deal, if any, that practices are receiving from their wholesaler or receive via a buying group.
Please only include data for your primary wholesaler, i.e. the wholesaler you use the most.
In the instances where you are entering in a percentage, please ensure that the figure is not entered as a decimal e.g. 10% not ‘0.1’
Discount off list price (if any)
In some instances wholesalers may have negotiated a discount off list practice with individual organisations. If you have a flat-rate discount please provide it here as a whole number.
Part of the deal you have with your wholesaler may include specific payment terms e.g. long settlement to provide cashflow flexibility for the practice or ‘pay on the day’ to ensure maximal discount. Please list yours as percentage not a decimal e.g. 10% not ‘0.1’. If you receive none, please enter ‘NA’
Discount for prompt payment
In some instances practices may have long payment terms available however receive an additional discount if payments are made within a shorter time period. If you receive this option, please list your potential additional saving as percentage not a decimal e.g. 2% not ‘0.02’. If you receive none, please enter NA
Surcharge or conditions for Visa/MasterCard (%)
Some practices have a surcharge for payment via Visa/Mastercard to recoup the wholesalers merchant fees. Please enter the surcharge amount as percentage not a decimal e.g. 10% not ‘0.1’. If there is no surcharge applied for these payments please enter ‘NA’.
Surcharge or conditions for Amex/Diners (%)
Some practices have a unique surcharge for payment via Amex/Diners Card to recoup the wholesalers higher merchant fees for these transactions. Please enter the surcharge amount as percentage not a decimal e.g. 10% not ‘0.1’. If there is no surcharge applied for these payments please enter ‘NA’.
Cost per deliveries
While some practices have free delivery worked into their deal, many pay a fee per delivery. If you are charged for each please enter your cost per delivery in dollars here. If your deliveries are free, please enter ‘0’.
Total number of deliveries per week
Some practices have a set maximum number of deliveries at no cost and pay a fee for deliveries beyond that limit. If you have a limit on free deliveries please enter that number here. If not, please enter ‘NA’.
Extra Deliveries Cost
If your practices has a fee for deliveries beyond a set maximum number of free deliveries limit, please enter the cost here. If this does not apply to you please enter ‘NA’